WAL Financial Analysis

Analysis Date: 1/29/2025

Business Model

Western Alliance generates revenue primarily through net interest income from loans and securities, as well as non-interest income from mortgage banking, fees and other services

Revenue Sources

• Net interest income (66% of Q4 2024 revenue)
• Mortgage banking revenue (11% of Q4 2024 revenue)
• Service charges and fees (4% of Q4 2024 revenue)

Revenue Distribution by Channel

• Regional Banking: 49% of loans, 34% of deposits
• National Business Lines: 25% of loans, 35% of deposits

Income Statement Analysis

• Net interest income increased 12.6% YoY driven by loan and securities growth
• Non-interest income up 89.9% YoY due to higher mortgage banking revenue
• Net income grew 46.7% YoY to $216.9M despite higher loan loss provisions

Balance Sheet Analysis

• Total assets grew 14.2% YoY to $80.9B driven by loan and securities growth
• Total deposits up 19.9% YoY with strong growth across segments
• Tangible book value per share increased 11.9% YoY to $52.27

Cash Flow Analysis

• Strong deposit growth drove positive financing cash flow
• Investing outflows primarily from loan growth and securities purchases

Capital Allocation

The company maintains strong capital levels with CET1 ratio of 11.3% and total capital ratio of 14.1%. Quarterly common dividend of $0.38 per share. Focus on organic growth while maintaining capital strength.

Management Commentary

Diverse commercial banking strategy drove strong Q4 momentum with healthy earnings growth

Asset quality remains resilient with net charge-offs of 0.18% for the full year

Seasonal deposit outflows in Q4 from Mortgage Warehouse Group

Overall Sentiment: Management is positive on business momentum while maintaining disciplined credit and capital management

Recommendation

Rating: Buy

Reason for Rating: Strong earnings growth, disciplined credit management, and attractive valuation support positive outlook

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/29/2025, 2:19:57 PM